Dotcom's Baboom eyes up to A$8.5 mln of new capital in 2014

Dotcom's Baboom eyes up to A$8.5 mln of new capital this
year

By Paul McBeth

July 16 (BusinessDesk) -
Baboom, the online music service part-owned by flamboyant
internet entrepreneur Kim Dotcom, will look to raise up to
A$8.5 million this year as it funds a full product launch in
the coming six months.

The company is seeking A$4.5
million from professional investors, selling shares at 40
Australian cents apiece and valuing the business at A$39.5
million, according to an offer document published on
Baboom's website. That would be followed by an initial
public offer in which Baboom would raise between A$3 million
and A$4 million, pending due diligence and the firm's
capital needs, with a view to list by mid to late November
on the ASX, Ben Yeo of Novus Capital, the offer's financial
adviser, lead manager and sponsoring broker told
BusinessDesk.

The initial A$4.5 million outlay would be
spent on buying a 20 percent stake in the ONEall social
network login platform, developing its mobile platform,
integrating backend systems and buying and licensing
music.

"By the time the offer closes I envisage the
company to be in a strong position to develop its backend
systems, mobile platform and content acquisition prior to
the platforms hard launch either late December 2014 or
January 2015," Yeo said in an email.

Baboom is looking to
woo musicians and licence holders by offering them up to 90
percent of revenue generated by the platform through
downloads, subscriptions, merchandising and ticketing,
essentially supplanting the traditional network of
agencies.

The pre-IPO capital raising closes on Aug. 18,
after being extended for a week to allow chief executive
Grant Edmundson to meet several potential investors in
Australia, and has attracted interest from investors in
Australia, New Zealand, Europe and Asia, Yeo said.

The offer is touted as a
speculative investment involving significant risks, citing
Dotcom's Megaupload as a potential hurdle to attract music
suppliers given its alleged copyright infringement and
digital music service business models as
challenges.

Still, the company sees a tie-up with Dotcom's
Mega file-storage business as providing a potential 8.4
million plus users and using a so-called Megakey to let
users to build up credits by watch online ads, which can
then be used to download music. Customers would also get up
to 50 gigabytes of storage for music they’ve
purchased.

Baboom would only have an exclusive licence on
such a deal for between one and three years, according to
the offer document.

The upcoming Baboom float coincides
with Mega's plans to list on the NZX via shell company TRS
Investments, in a deal valuing the file-sharing company at
$210 million. Mega is in the process of raising US$7 million
ahead of the reverse listing.

Auckland-based Dotcom staged
a launch for Mega in early 2013 to replace Megaupload, his
previous venture which was shut down in a US-led operation
that alleged the file-sharing firm and its owners had
committed mass copyright infringement and money laundering
of more than US$500 million. He and co-accused Finn Batato,
Mathias Ortmann and Bram van der Kolk are fighting
extradition to the US where they faces the
charges.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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